In this course you will understand how firms are organized, what factors must be taken into account in making critical design decisions, and what role managers play in making these choices. In order to answer these questions, we will first develop a conceptual process model that links business models, external and internal contingencies, and organizational design. Second, we will focus on the fundamental principles of organization design and what alternative design choices are available for managers. Finally, we will apply these concepts and ideas to organizational situations to develop the critical insights and decision making skills to build effective organizations.
Learners:
• Will understand how managers create value through their organizations
• Will have a good understanding of the fundamental principles and factors important to organizational design
• Will be able to design the coordination, control, and performance measurement systems to manage an organization.
This course is part of the iMBA offered by the University of Illinois, a flexible, fully-accredited online MBA at an incredibly competitive price. For more information, please see the Resource page in this course and onlinemba.illinois.edu.

JR

Watch the summary videos at the end of module four of managing the organization first, they provide great structure to attach your learning to.

À partir de la leçon

Module 4: Elements of Organization Design – Integration

How is organizational integration achieved with the use of coordination and control tools? Coordination and control are the essential parts of organization design, and we need to describe how these tools are used to design the organization.

Enseigné par

Huseyin Leblebici

Professor of Business Administration

Michael Bednar

Associate Professor

Transcription

[SOUND] [SOUND] So what are the types of coordination mechanisms that are used in today's organizations? I gave you a list that is a kind of simpler list, but let's go in more detail. When we look at coordination you can see that in a organizational hierarchy you have the top management, middle management and lower management. And we can have coordination between layers and we call that vertical coordination. The other hand, if you look at the bottom, you will see that there has to be a coordination among different individuals or departments groups at a given hierarchical level. And we call them [INAUDIBLE] horizontal coordination. So how should we choose what coordination mechanism should be used under different circumstances. The rules actually simple. We have two major rules, one is what is the cost of designing and implementing a particular coordination mechanism? Different mechanisms require trained personnel, creation of new offices, or the establishment of unique teams, all of which are costly for the organization. So we need to ask ourselves, do we really need to have a cross functional team for every coordination need? And the second one of course, is what is called the information carrying capacity of the coordination mechanism. Because the objective of any coordination mechanism is to transmit the relevant information effectively from one position to another, inside your organization, it is critical for us to ascertain how much information could be easily carried within that mechanism. This comes actually from the terminology in computer science and electrical engineering. In other words, what is the bandwidth of our coordination mechanism? So if you put these two dimensions together, you'll get basically a system. But think about an example. For instance, a written memo is relatively cheap to produce, but has a limited information carrying capacity. I'm sure wherever you are, you might probably, and you must have some kind of emergency rules for your building. In our environment where we have a lot of hurricanes or different kind of weather conditions, tornadoes especially in the midwest. We receive written memos which says, these are the things you need to do to deal with an emergency situation. They have to go to basement, wait for the alarm to ring again, so that you can resume your activities. On other hand, but there are also team meetings. Which has a higher bandwidth of carrying capacity but it is more costly. But we also know that a written memo is not sufficient to deal with emergencies. So what we to do? We have emergency exercises, even if there is no emergency we actually try to practice to see if it is working, whether everyone is acting in a coordinated fashion. So if you look at vertical coordination mechanism with respect to it's cost as well as its carrying capacity this is what you will see. We know that vertical coordination refers to the ways different hierarchic levels within an organization coordinate their activities. So what are our tools? Here's the costs, and here's the carry capacity. The usual easiest solution for lower levels to interact with the higher levels in a coordinated fashion is what we call heirarchic referrals. If a decision is not something that you can make, then you ask the next higher level. You can develop rules, plans, standard operating procedures. Just like the kind of plans we have for building emergencies. Or you can have new positions in the hierarchy where the goal of that individual position is to make sure that the coordination occurs between levels. So in other words, instead of having three layers in the hierarchy, you create a fourth layer in the hierarchy. And that hierarchy level's job is to make coordination succesful. Or we can establish very complex, and today's organizations use these vertical information systems. So we have IT systems, MIS systems, so that the information is distributed to different levels inside the organization without much delay. So these are some of the tools we can use but as you can see, that for each of the tools we have the cost goes up. So setting up vertical information systems, yes will give us a better carrying capacity but at the same time it will increase the cost. Now the next element of coordination is horizontal coordination mechanisms. So they are similar in nature in the sense that we need to think about both the cost and the carrying capacity. So what is horizontal coordination mechanism, they refer to the ways different units at the same heirarchic level within the organization coordinate their activities. So here's the cost side and at the bottom the carrying capacity. So one possible strategy is paperwork. Just like having standard operating procedures. So everyone knows what needs to be done at what time. So the paperwork is used extensively in organization. It is cheap, just like sending a memo. But really getting people do what the memo suggest is not that easy. So then what do we do? We have direct contact. If something comes up that needs to be coordinated, we pick up the phone, we send an email, we go and visit someone in the office, or in the workplace. Or we can establish liaison roles inside the firm. These are roles we're going to discuss in our next video, deals with the idea of one person in a given department has the responsibility where he or she will basically play the role of a coordinator. We can of course, so build task forces. We can have full time integrators, rather than just simply a liaison person. And we can have permanent teams inside the organization. For instance board of directors, of top management teams are permanent teams. These teams don't change, but their job is to make coordination possible horizontally, because they represent different divisions if for an individual, or product lines, or different services provided by the organization. But as we move from the lower levels, where the carrying capacity is low to a higher level, we need to understand that the costs are going to go up. So choosing the right one is not always that simple. So here's an in video question for you. We regularly hear terms such as liaison role, permanent task force, full time integrator. First, try to think what these terms actually mean and try to think whether you have one of these types of coordination mechanisms in your organization. So there is a continuous evolving terminology in organizational research to understand how actual coordination and control can be done. Now liaison roles are defined like this, positions created specifically to link to departments. All organisational units to work together and individuals in these positions act as a bridge among different units and ensure effective communication and cooperation. These individuals work in their own departments but they have this additional role. When we hear the term full time integrator. Full time integrator can be a person, but it could be a unit and they are outside of the existing departments, with the responsibility to coordinate the activities of several departments. So they usually have titles such as product manager, brand manager, or project managers. Their job is to bring these different units together to accomplish a very specific task. And finally permanent task force. Permanent task force is a group of individuals who are responsible for coordinating the activities of separate organizational units dealing with specific set of tasks. So our top management team is a really permanent group but certain segment of those individuals can be assigned to a task that is going to be repeated for instance you can have a strategy development group. And the permanent task force will be responsible for development alternative strategies for the organization. Now as you can see, there's always this idea of teams or groups being discussed when we discuss coordination. In our next video we are going to link coordination to the idea of teams.